They mean that the space should be set aside for the equipment, not used for the equipment and also storage.
Given the opening reference to safety, I'd assumed the problem work cardboard boxes was fire risk.
Sure. You dedicate the space to the equipment for safety reasons.
In commercial you can sort of trust they won't do that. Or it's on them if they do. But with residential properties yeah no. You go look and there is a closet with a water heater and they've got boxes and cleaning supplies stored in there.